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 Got a burning question?
You
are important to us. Your questions and feedback can help us improve
ourselves. Because we answer your question personally, not by some silly
automated answering machine, it may take a while for you to get your answer.
We hope you'll understand. Our eyes are glued to our computer screens during trading
hours to hunt for profitable trades for our subscribers so when it seems like
we're taking forever to answer your question, you know why.
More often
than not, we are frequently asked the same questions time and again. Do take
a look at these Frequently Asked Questions. You may find your answers here.
Frequently
Asked Questions
- How many
recommendations do you make per month?
- What
strategies do you use in your trade?
- Do all your
recommendations make money?
- Do I need a
big account to profit from your recommendations?
- What if I
can't get your recommendations filled?
- Does
MarketNeutralOptions provide auto-trade service?
- When do you
bill me?
- What is the
minimum recommended amount to start as a small trader assuming 4 trades
per month?
- When do you
normally send recommendations? Is there sufficient time to execute the
trade?
- What kind of
iron condors do you use?
- After
receiving your second trade recommendation, I was not able to get my
positions filled. Will I be billed for trades that I did not enter?
- Can you
automatically bill my Paypal account or credit/debit card each month?
- How does one
open a trading account to trade with MarketNeutralOptions?
- Do you
charge a fee for using Autotrade at thinkorswim? If so, how much is it?
Is this a one off fee or a monthly rate, or is it included in the fees
you charge already?
- How much
money is usually needed for your average Double Diagonal trade?
- Why
don’t you just do iron condors every month instead of double
diagonals?
Also why don’t you use SPX (which is European style) to do
condors/diagonals
instead of SPY, IWM, etc that are American style which can get assigned any
time?
Answers
- There is no fixed number of
recommendations per month. There may be more recommendations this month
but less next month. It all depends on the market conditions. We want to
avoid high-risk positions. As such, we'll shy away from entering new
positions when market conditions are not favorable for profitable
trades. On average, we posted about 4 to 5 trade recommendations per
month.
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- We use popular market neutral
option strategies such as the Iron Condor and Double Diagonal for our
recommendations. We trade mainly index-tracking ETFs such as SPY, DIA
and IWM as well as index options such as SPX and RUT. As you may know, a
Double Diagonal turns into an Iron Condor after rolling. So our
portfolio will have a mixture of near month Condors and far month Double
Diagonal. Since Iron Condors are short vega and Double Diagonals are
long vega, we should be sheltered from massive volatility risk.
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- No, we won't promise that all our
recommendations will make money. But, of course, we try to win more than
we lose. We're not in the business of speculating market directions, we
aim to achieve consistent monthly income through time-decay. So far we
are able to achieve on average 30% to 40% returns per trade.
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- Our recommendations are
suitable for both small and big accounts since the margin requirement is
kept low (normally about $100 to $800 per trade). For big account
holders, you can put on more trades while smaller account holders can
put on 1 or 2 trades.
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- Our recommendations are sent
to you real-time. The price indicated are also real-time. We only send
out an advisory after
we get filled at the target price. The price we indicated in the
advisory is the price we are filled in our personal accounts. However,
market changes constantly. You may be able to get a trade for $0.10 this
moment but have to pay $0.20 for the same trade the next moment. The
indicated price in our recommendations are the best offered price and
should be able to get filled. We recommend you execute the trade at the
indicated price or better but not worse. For example, there is a trade
that will cost you $0.15 today but you are not filled today. You can try
for the same trade again the next day if and only if you can get it at
the same price of $0.15 or lower.
The same works for credit trades; you should execute the trade only if
you can get a better
fill.
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- Yes, we currently offer
auto-trade service for subscribers with ThinkorSwim or Synergy accounts.
Auto-trade service is free of charge.
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- Your billing cycle depends on
the date you signed up and subscription plan you chose. For example, if
you signed up on 3th March for a monthly subscription plan, your billing
cycle will be 3th of each month, i.e., your bill is due on 3th of each
month.
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- Our advisory service is
suitable for both small and large account. Each trade may requires a
margin of between $100 to $800. Very rarely do we need more than that
for each trade. You can put up 1 trade per recommendation or any number
you are comfortable with. But we advise you to not risk more than 10% of
your trading capital on each trade. If your trading capital is around
$5000, we recommend that you put not more than $500 for each trade. But
again, it all depends on your risk appetite.
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- We send recommendations
real-time as we find them during market hours. Because our trades are
short to medium term, the recommended price will normally be there for 1
or 2 days. For example, we may be looking at a Iron Condor for $1.00 at
the moment, but the next moment it could be trading at $0.95 or $1.05.
We advise our subscribers to try to get filled at the recommended price.
If the price difference is not that great, it may still be a viable
trade even after a few days. You don't really have to stay in front of
the computer all day waiting for our recommendations, you can try to
enter the trade a day after our recommendation and still get the same
price or better. However, do note that market volatility may cause the
price to move rapidly. In cases like that we recommend that you give
this trade a miss if you can't get it at a better price.
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- Mainly I use two types of
iron condor. One type of IC is to look out for a 1:1 or nearly 1:1
risk/reward. We normally do this on liquid ETFs such as SPY, DIA and
IWM. Examples of these type of iron condors will be the IWM
iron condor initiated on 23 OCt 2007. We are risking $1.05 for a
potential profit of $0.95. This is nearly 1:1. Obviously, probability of
success will be near 50% as well. With so high a probability of success,
we can afford to be a bit more patient and optimistic.
However, we also like to limit our losses should the position
turns against us. We’ll set our stop-loss at about 20-30% of our
potential profit. For example, if we are risking $1.05 to make $0.95, our
stop-loss will be around $1.20 to $1.30. That is, we’ll close up or
roll up the trade when the position is trading at $1.20-$1.30. Alternatively,
we’ll look to closing it during the last 2 weeks before expiration or
when the position is trading at $0.20 or less.
The other type of iron condor we put up here is the 1-standard
deviation type. Around 30-35 days before expiration, we’ll put up an
iron condor on RUT or SPX. The biggest problem with these indices is getting
them filled. These iron condor will not offer 1:1 risk/reward but
they’ll have very good probability (1 SD is 68%). In fact, the
risk/reward for these type of iron condor is very bad. For example, we sent
out an advisory on RUT IC on 8 Oct 2007 for a $2.30 credit (we are risking
$770 to make $230). But we have a probability of about 64.61%. These type of
iron condors require constant care. The moment the underlying moves too close
to our short strike (usually around 10-15 points), we’ll close up the
trade immediately. At no time we’ll allow these type of iron condor be
ITM. The risk is simply not worth the credit we got. Furthermore, because it
is so difficult getting these iron condor filled, we have to set our buffer
bigger. Indeed, we normally place a mental alarm when the underlying is
trading 30 points away from our short options.
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- This issue does happen from
time to time. Unfortunately, there is not much we can do because it is
the subscribers’ brokers that execute the trade. To be fair to our
subscribers, we only send out an advisory alert after we get filled at
the target price. We don’t pick a price from nowhere and send it
to our subscribers. We make sure that we can get that price ourselves.
However, at times, the market may move too swiftly and the target price
may change leading to some subscribers not being able to get filled at
the target price. The best way to avoid such problem is to sign up with
our auto-trade service with our partner brokerage firms for free.
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- Yes, all payments will be
automated via Paypal. You can use your credit or debit cards for
payments. You can even use direct debit from your bank account if your
bank account is linked to your Paypal account.
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- You can open a trading
account with any options brokers. We are simply an advisory service. We
send you the recommendations you put up the trade yourself. Of course
you can sign up for our free auto-trade service with our partner
brokers. You can find out more here: http://marketneutraloptions.com/autotrade.htm.
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- Autotrade is a free service
provided by us and our partner brokers. There is no extra charges
besides your regular commission rates (to the broker) and your
subscription fee (to us).
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- Our double diagonal is
usually set up with ETFs such as SPY, DIA and IWM. They are normally 2
points wide. On average the reduction in buying power for each DD is
between $180 to $230 each. However, sometimes if we can get a good one, we
may have a wider DD like a 3 or 5 points wide. This will increase the
margin requirement for the DD (increase in the reduction of buying
power). But we don’t usually look for DD that needs more than $500
because we don’t want to lock up our capital so much so long.
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- Double diagonals normally
offer better risk/reward than iron condors. When we roll a double
diagonal into an iron condor, the amount of credit we collected is often
unachievable if we were to simply do an iron condor. Of course, the
trade off is time, a DD is held up for a longer period. One more feature
of a DD that I like is the chance to get out of a position clean even if
the market moves big-time against our position. We usually paid a small
amount to initiate a DD, and when the time comes to roll, we may find
that the market has moved too close to our short strikes. When that
happens, we can simply close up the trade for a tiny loss or even a
profit. A DD has a buffer that allows us a margin of error. An IC is
shorter term and offers no buffer.
One more reason why we do a mixture of both here is that IC is
short Vega (Greek for IV) while DD is long Vega. The short and long vega from
the positions will cancels out each other reducing our exposure to IV risk.
We do trade SPX and RUT almost every month. We use them mainly
for condors. However, because SPX and RUT are only trade at the CBOE, they
are very difficult to get filled at the right price. To be fair to our
subscribers, we only send out an advisory alert after we can get it filled
ourselves. By contrast, SPY, IWM and DIA are traded in most exchanges and
thus are more liquid and offer better bid/ask price. Again, we want to strike
a balance here and therefore, we trade a mixture of all.
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Still can't find
what you're looking for?
Simply drop us an email at support[at]marketneutraloptions.com. *[at] = @. The reason why we
don't type [at] as @ is because we try to avoid spams as much as we can. Spam
robots can pick up email addresses when they are listed on a webpage. By
keeping our mailboxes free of spams, we can attend to you sooner.
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